Friday, February 05, 2010

Rounding up ECFA (=Exploiting China to Forego Annihilation)

Today, in our electricity bill, the government was kind enough to include this pamphlet exhorting us to support ECFA. Note the use of the HSR to invoke visions of modernity and progress. Sorry, DPPers, but you can't complain -- remember when you hung those UN for Taiwan banners on government buildings? The Ma government is trying harder to persuade the public that its suicide pact ECFA will be good for the island.

The 'sign or die' theme that dominates the government's approach to ECFA was on display in this recent piece from the CNA on the island's petroleum products industry and ECFA, highlighting an interview with the head of the island's synthetic resins industry....
In a move to support a proposed economic cooperation framework agreement (ECFA) with China, Hong said that if Taiwan's petrochemical industry does not receive zero-tariff treatment under the trade pact,it will not be able to survive.

One year later, after petrochemicals were included on the ECFA early harvest list, Hong still has concerns about the progress of signing the trade deal.

"If Korea and Japan -- Taiwan's two biggest competitors -- sign free trade agreements with China ahead of us, China will no longer need to place their orders in Taiwan, so there will be no room for us to survive," Hong said in a recent interview.

At present, Taiwan's petrochemical exports to China are subject to a 6.5 percent import duty -- already higher than the 5.5 percent import duty for Korea and Japan. However, the latter two will be granted zero-duty treatment from 2012.

"If we cannot grab the moment to secure the market, we are sending ourselves to the mortuary," said Hong.
Apocalyptic language notwithstanding, further down it is noted:
Hong, who has also served as president of the Formosa Chemicals & Fibre Corp., pointed out that while China's imports of petrochemicals were up to about 25 million tons a year, the country was also developing its own petrochemical industry to meet its growing domestic demand.

China's demand will remain strong in the next few years, said Hong, explaining that the per capita consumption of plastic materials in the country is only a few kilograms but is expected to grow to about 20 kg in the future, compared to Taiwan's per capita consumption of around 100 kg.

However, he predicted that China will slowly reduce its dependency on imports. "We don't have much time left," Hong said.
In other words, Hong argues that we should sign the ECFA immediately to save an industry which China is going to largely take over in any case -- the Taiwan version of trading permanent gains for China for temporary concessions to Taiwan. It's easy to see where this will go -- first the zero tariffs, then those won't be enough, and demands for even more subsidies will follow.

Meanwhile pressure from Beijing is growing to open the market to Chinese agricultural goods, move that would devastate local agriculture.

Last week, a high-level meeting started between Taiwan and China to hold talks on a proposed Economic Cooperation Framework Agreement (ECFA). The Library Times informed that China asked the island to open its market to the banned agriculture items in these talks.

While talking to reports, Vice chairman of the agriculture council Hu Hsing-hua talked about the ECFA and the potential effect on Taiwan’s farmers.

Hu said, “This is in fact a hypothetical subject.”

Further, Hu said, “ECFA does not take Taiwan's farmers into account. We must first see the benefit for the farmers before we discuss the subject. Whether or not to proceed also must be decided by the people. We also hope the people can oversee the agricultural imports together.”

There are also concerns that China will flood the market with its agricultural goods via a third country. Smuggling of agricultural products is already underway -- the island has been dependent on garlic imports from China for years. The Liberty Times reported the other day that KMT think tanks are starting to float trial balloons for the lifting of the ban on agricultural products -- remember too that the first trial balloons for the importation of Chinese labor date back two decades. It's all coming down the pike, probably in Ma's second administration.

Pan-Green Academics warn on signing ECFA, as they have for the last two years....
At a forum hosted by the group Taiwan Advocates yesterday, Taiwan Thinktank chairman Chen Po-chih (陳博志) said the director of China’s Taiwan Affairs Office, Wang Yi (王毅), had stated that after Taiwan signs an ECFA with Beijing, there would be few cross-strait economic issues left for both sides discuss, so dialogue on political issue would be unavoidable.

Soochow University political science professor Luo Chih-cheng (羅致政) said the Chinese Nationalist Party (KMT) government has expressed its hope to sign an ECFA this May. If that happens, Luo said, Taipei and Beijing would start talk on political issues from the middle of this year, and that political dialogue would possibly include signing a peace treaty with Beijing.

Luo said that a Democratic Progressive Party (DPP) victory in the 2012 presidential election might be too late if President Ma Ying-jeou’s (馬英九) signs a ­political treaty with China during his term.
2011 is the hundredth anniversary of the founding of the ROC.

...and as far as China's promises are concerned, there are quite a few complaints that China is not keep its side of bargains (like here, for example).

Finally, it should be noted that the recent arms sale to Taiwan, the subject of several awful commentaries in the US media recently, has had no effect on ECFA, according to Beijing.
The second round of negotiations will be delayed until late February or early March as Beijing has said there is "no way" to send negotiators to the island earlier, the Taipei-based China Times newspaper reported on Thursday.

Taiwan's China policymaking body confirmed the estimated dates but said they did not represent a delay in talks.

Taiwan's acceptance of a $6.4 billion package of U.S. weapons has had "no effect" on trade talks despite Beijing's outrage toward Washington, said a media relations officer at Taiwan's Mainland Affairs Office, a government body.
But look at that opening sentence of the article, which appears purposefully written to convey the idea that the arms sale and ECFA postponement are related : "China has postponed a second round of free trade talks with Taiwan until after the Lunar New Year holiday amid US plans of arms sales."

This article points to a central truth about the arms sale complaints of China: if China really wanted to stop Taiwan from purchasing weapons from the US, all it has to do is punish Taiwan. But it never punishes Taiwan though it has myriad ways of doing so; instead, it always attempts to transfer the costs back to the US-Taiwan relationship by hacking on the US. The goal, of course, is to chip away at US support for Taiwan. This was difficult even a decade ago, but now China's rise has spawned a whole class of commentators who argue that the US should sell out the island in order to reap the big bucks from China, making China's job that much easier -- surely the ultimate realization of the US habit of making permanent concessions to China for temporary gains....

UPDATE: A friend notes in the comments that FCC already has two petrochemical plants in China.
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Tim Maddog said...

Michael, you chastised:
- - -
Sorry, DPPers, but you can't complain -- remember when you hung those UN for Taiwan banners on government buildings?
- - -

Uh, yes we can. There was nothing dishonest about the "UN for Taiwan" campaign. Although we can't complain about the mere use of our utility bills to disseminate propaganda, we can complain about the real deal behind ECFA. ;-)

Tim Maddog

Michael Turton said...

Haha. Good to see you too, man.

Shit yes, bitch about ECFA for sure. It's economic suicide for the island.


Robert R. said...

...Hong said that if Taiwan's petrochemical industry does not receive zero-tariff treatment under the trade pact,it will not be able to survive.


Hong, who has also served as president of the Formosa Chemicals & Fibre Corp., pointed out that while China's imports of petrochemicals were up to about 25 million tons a year

That's funny, because FCFC has at least 2 (if not more) petrochemical plants already built in China...

Ben Goren said...

Ah, I see you got the unwelcome propaganda in the utility bill as well. While you away this happened to me and I too had the same I dea:

Thomas said...

Trial balloons on opening Taiwan to agricultural products from China aside, I am interested in seeing how this opening will come about and what the reaction to it will be.

The idea would naturally generate a huge deal of opposition in the South. This, combined with repeated assertions from Ma, Lai, etc, that the ECFA will not open Taiwan to agricultural goods could create quite a storm right around the time when the parties will be making their opening pitches for the special municipality elections.

Anonymous said...

Did you read this/link to this (you link so much it's hard to keep track)?

Mexico's economy: A different kind of recession [Economist]

Lots of parallels between Taiwan | Mexico and China | US as well as ECFA | NAFTA. Obviously, given the small size of Taiwan, the effect will be much, much greater in Taiwan than elsewhere.

Here are two juicy quotes:

"The recession has exposed structural weaknesses in Mexico’s economy. NAFTA brought a torrent of American investment as manufacturers set up plants south of the border to take advantage of lower labour costs. This influx brought modernisation and new technology, and underpinned rapid economic growth in the late-1990s.

But NAFTA has left Mexico highly dependent on the health of the American economy, and on a few lines of cross-border business in particular."

China won't even be bringing Taiwan technology as Taiwan is far ahead! It will merely leave Taiwan dependent.

"Although it has signed trade agreements with other countries, Mexico’s preferential access to the world’s largest market caused it to neglect them. “We didn’t have to learn how to deal with other business cultures,” says Alejandro Werner, a deputy finance minister. “It was too easy to just export to the United States.”

Yep. So much for FTAs with other countries.

Anonymous said...

FCC has two petrochemical plants in China...hmmmmm, maybe they were investing there to avoid the tariffs? (How do you think Taiwan used to get foreign car companies to assemble in Taiwan rather than just ship in cars made elsewhere?)

If you don't want pro-government propaganda in your electricity bill, maybe privatizing Taipower is the way to go.

Anonymous said...

"If you don't want pro-government propaganda in your electricity bill, maybe privatizing Taipower is the way to go."

Yes, and CPC and the rest as well. Why the hell is the government refining gasoline? There is no lack of private sector initiative and capital for these kind of industries.

Ma may do it actually. The government needs money, and he has done ZERO major projects that he said he would do. Selling government industry is one way to raise lots of cash.